Real estate is a massive part of the Kenyan economy. It affects many sectors and contributes to the gross domestic product. The two things are intertwined, and growth in one area usually means growth in another industry. Additionally, real estate significantly contributes to expanding a country’s economy. Here is more on the impact of real estate on the market.
Increase in spending
Real estate forms a considerable part of what Kenyans spend their money on. That way, it makes up a significant portion of the spending economy. Real estate is an asset, making it an attractive investment option for those who can afford it. Spending within the economy allows money to move from one sector to another. It also means that funds are available for people to use on other items. For example, a homeowner who sells their house can spend the money on starting a business. In this way, spending helps the economy to grow.
An additional source of income
Additionally, real estate is an excellent source of passive income. Homeowners can rent out their houses or apartments to interested tenants at a fee. Alternatively, one may own a commercial building and rent office space to businesses. The money they receive in rent allows them to earn income without diligent work. This system is crucial for pensioners and retirees because it will enable them to make a living. Incomes for Kenyans are a key part of the economy because they empower citizens to fend for themselves.
Creation of job opportunities
Another fundamental impact is the creation of multiple job opportunities. That is especially true for real estate development; building new commercial spaces from scratch requires a lot of labor. Employees range from engineers, architects, project managers, and construction workers. Job creation is very important for the economy in Kenya. It allows workers to earn a living and provide for their families. Thanks to government investment in higher education, it also helps take advantage of all the skilled labor in the country.
Real estate also tends to be a representation of how well or how badly the economy is doing. When the economy is doing well, real estate usually grows. That is because there is more money in the economy for developers to spend on new projects. Also, investors have additional capital to spend on buying new houses or leasing commercial spaces. When the economy is down, real estate also tends to dive. Many homes go unsold since people have less money to spend on additional properties. As a result, the prices go down, and supply surpasses demand.
Increase in investors
Real estate, or the lack thereof, affects the country’s attractiveness to foreign investors. When real estate developers put up commercial and residential spaces, they allow foreigners to invest in the country since space is available for their offices and homes. Additionally, more retail spaces in different locations will enable investors to choose from multiple options. They can rent places in areas that suit their businesses best. Thus, good real estate options attract investors who contribute to the economy’s growth.
Growth in real estate also contributes to an increase in debt, especially personal debt. Banks put out more loans as people look for real estate financing options. Many buyers and investors do not pay for their properties upfront. Many prefer to take out loans and repay them later, especially when their investment pays out. Most top real estate companies in Kenya have arrangements with banks and financial institutions. Their clients can pay for homes over several months or years. As a result, real estate in Kenya contributes to more borrowing.
As shown, real estate is a vital part of the economy. The two industries support each other and contribute to the development of Kenya in general.